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Facebook's Stock Seesaws as Investors Parse a Mixed Earnings Report

Posted on Thursday, November 01, 2018 by Elliot Roberts

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"The upcoming elections will be a real test of the protections we've put in place", Zuckerberg said.

Overall third-quarter revenue was $13.73 billion, up 33 percent from the same period previous year and below the $13.78 billion average analyst estimate in Refinitiv data. Monthly active users totaled 2.27 billion, up 10% from a year earlier. We'll have to wait and see if the good feelings last. Profit rose to US$1.76 a share, well ahead of Wall Street projections, according to data compiled by Bloomberg.

Facebook earlier this year said revenue growth rates would decline in the third and fourth quarters, sending shares plummeting.

"Facebook continues to be a dominant force in not just social media, but also advertising as a whole, and counters some of the recent pessimism", Mark Mahaney, an analyst at RBC Capital Markets, said in a note to investors before the results. They reversed course several times, falling and gaining as much as 5%, during an hour of volatility after closing on Tuesday up 2.9% at $146.22.

Zuckerberg pointed to how people are sharing more on Facebook's "Stories" product, an ephemeral photo and video service.

Morgan Stanley analysts also mentioned the short-term monetization headwinds of moving towards Stories, messaging, video, and Instagram Explore, which are all lower-monetizing interactions. Users tap through them and see ads in between. But new problems keep cropping up nearly every week; last week, for example, the company said it had identified and removed a new influence network that had originated in Iran.

Zuckerberg said he expected 2019 to be "another year of significant investment" for Facebook, and executives projected revenue growth would slow. However, in the US - where iOS is the dominant platform - it is struggling more. Facebook's executives have touted their commitment to avoid the missteps of the 2016 election, when Russian Federation ran a misinformation campaign that disrupted USA politics.

Controversies that have battered Facebook since the 2016 presidential election in the U.S. have raised questions over whether co-founder Mark Zuckerberg should keep his post as chief executive. About 14 million people had sensitive information, like their search history and location check-in history, accessed by hackers.

Shares fell again after Facebook Chief Executive Mark Zuckerberg, on a conference call with analysts, repeated the company's warning that shifting user behavior would leave revenue and cost growth out of sync for "some time". It was up more than 4% when Facebook finished its call with analysts late Tuesday.